UK blocks Microsoft's $69 billion takeover of Activision
April 26, 2023
The UK on Wednesday blocked Microsoft's $69-billion (€62-billion) takeover of US video game giant Activision Blizzard, owner of hit games "Candy Crush" and "Call Of Duty", arguing it would harm competition in cloud gaming.
The country's antitrust regulator, Competition and Markets Authority (CMA), said that Microsoft's commitment to offer access to Activision's multi-billion dollar "Call of Duty" franchise to leading cloud gaming platforms would not effectively remedy its concerns.
The regulator said it prevented the deal "over concerns... (it) would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come."
Xbox-owner Microsoft announced its Activision bid in January 2022 to boost its firepower in a video gaming market, triggering antitrust concerns worldwide. Europe will decide on the Activision deal by May 22. The US Federal Trade Commission is also seeking to block it.
Microsoft and Activision will appeal the verdict
Both firms expressed deep disappointment over Britain's decision regarding the gigantic takeover, which has yet to win regulatory nods in Europe or the United States.
Microsoft's president Brad Smith said in a statement the company remained fully committed to the acquisition and would appeal the decision, while Activision said it would "work aggressively" with Microsoft to reverse it.
Activision's CEO Bobby Kotick told staff it was not "the news we wanted — but it is far from the final word on this deal."
Activision also threatened to reassess its growth prospects for the UK. "Global innovators large and small will take note that — despite all its rhetoric — the UK is clearly closed for business," the company said in a separate statement.
Shares in Activision, which also makes "Overwatch" and "World of Warcraft," fell 10% in premarket US trading to $78, moving further from Microsoft's offer price of $95 per share.
Why companies failed to allay the CMA's concerns
Wednesday's announcement comes after the CMA last month dropped its concerns about the impact of the deal on the console market led by Sony's market-leading PlayStation.
That left cloud streaming services as the remaining hurdle, which Microsoft sought to overcome by signing licensing deals with the owners of streaming platforms including Valve Corp, Nvidia and Boosteroid. It had already offered Sony a 10-year "Call of Duty" license, in line with an agreement to bring the multi-billion dollar franchise to Nintendo's Switch.
However, the CMA said Microsoft had an estimated 60%-70% of global cloud gaming services as well as competitive advantages including owning Xbox, PC operating system Windows and cloud provider Azure.
The US software giant offered licensing deals to allay the concerns, but the CMA said they would only include some Activision games, carried a significant risk of disagreement and would need overseeing by the regulator.
dh/jcg (Reuters, AFP, dpa)